New York - World stocks dropped following weakness in German shares on Thursday, and the US dollar climbed against the yen on speculation Federal Reserve Chairman Ben Bernanke will not unveil dramatic measures to rescue the economy on Friday.
Stocks in Europe and the United States fell amid trader talk that a short selling ban may be enacted in Germany after the market's close. Germany's DAX was down 2.1%.
Gold fell for a third day as an exchange sharply raised futures trading margins after repeated record highs by the precious metal.
US stocks turned lower, with shares of Apple falling after the resignation of its chief executive, Steve Jobs. Bank shares rose, however, after Warren Buffett's Berkshire Hathaway said it would invest $5bn in Bank of America.
Bernanke is due to address central bankers at an annual symposium in Jackson Hole, Wyoming, on Friday. His speech last year laid the groundwork for the Fed's $600bn bond-buying program to revive a sputtering US economy under a policy that was termed the second round of quantitative easing.
While many doubt Bernanke will immediately commit to conducting a third round of quantitative easing, investors generally expect him to stress that the central bank stands ready to act if necessary.
"Over the last couple of days, we have gone from pure excitement about QE3 to being far more muted. I suspect there has been some positioning for a slightly more mundane speech coming from Bernanke," said Camilla Sutton, senior currency strategist at Scotia Capital in Toronto.
Markets have been volatile in the past month because of concern over whether the US economy is headed for another recession and how far the euro zone debt crisis may spread.
By 17:00 local time, the JSE All Share [JSE:J203] index finished 0.86% weaker at 29 349.45 points, led by a 2.01% fall in banking shares and 1.78% dip in platinums while financial slipped 1.63%. Industrials lost 1.29% but resource stocks lifted slightly 0.08% and gold shares picked up 0.62%.
The rand was bid at 7.22 to the dollar, unchanged from the JSE's close on Wednesday. Gold was trading at US$1 737.15 a troy ounce from US$1 781.71 at the JSE's previous close, while platinum was at US$1 814.50/oz, from US$1 835.50/oz previously.
The MSCI world equity index fell 1%. The benchmark index, however, is on track to post its first weekly gain in five weeks, having hit an 11-month low earlier this month.
On Wall Street, the Dow Jones industrial average was down 104.14 points, or 0.92%, at 11 216.57. The Standard & Poor's 500 Index was down 10.11 points, or 0.86%, at 1 167.49. The Nasdaq Composite Index was down 25.85 points, or 1.05%, at 2 441.84.
Berkshire will invest in the largest US bank by buying a big chunk of Bank of America preferred stock. Shares of the Dow component jumped 17% to $8.16 but are still down for the month.
European stocks were down 1.2%.
Gold drops
Gold extended its sharp decline after posting its biggest daily drop in futures since 1980 on Wednesday. Spot gold was down 1.6% at $1 722.50 an ounce. It hit a record high of $1 911.46 earlier in the week.
The fall came after CME Group raised trading margins on bullion futures by about 27%, the biggest hike in more than two and a half years and the second increase in a month.
Gold prices had jumped about $400 since July as worries about a global recession sent investors scrambling for the safe-haven asset.
The dollar rose to a two-week high against the yen, up 0.5% to 77.41 yen, moving further away from a record low of 75.941 set on trading platform EBS last week.
The euro steadied above $1.44, supported by a brief jump in risk appetite after Berkshire Hathaway said it would invest $5bn in Bank of America.
Any more printing of money by the Fed would pressure the dollar, potentially triggering a spike in commodity prices as it did last year.